labour market shifts

Question 1

shifts in demand factors

Answer 1

derived demand
productivity
capital costs
migration
income tax and benefits
non pecuniary benefits
education and training

Question 2

derived demand

Answer 2

derived demand is the demand for a good or service derived from the demand of another good/service
eg demand for builders is derived from demand houses

Question 3

productivity

Answer 3

if productivity increases for example if tree cutters got chainsaws instead of exes
demand for woodcutters will increase because the new chainsaws will increase the productivity of woodcutters meaning each woodcutter will be able to produce more wood and make firms more profit
so firms will demand more workers
therefore if productivity decreases so will demand for workers

Question 4

evaluation decrease demand

Answer 4

if productivity increases and workers produce more wood they need fewer workers

Question 5

capital costs

Answer 5

capital and labour are subsitutes
if capital costs decreases demand for labour will shift to the left because workers can replace workers with capital

Question 6

migration - supply

Answer 6

if immigration happen (workers move abroad) supply will increase and therefore shift labour supply to the left
however if more workers migrate into the country this will shift supply to the right

Question 7

income tax and benefits - shifts - supply
tax-analysis

Answer 7

if benefits decrease - unemployed workers will have less disposable - therefore having to enter the market and supply their labour- increasing supply and shift supply to the right
vice versa

in term of taxation supply of highly skilled workers may decrease because a higher tax reduces the income they seep for working. Reducing the incentive to work, decreasing the supply of labour
However, some workers need to earn a certain amount of income (e.g to pay of their mortgage) The higher tax will now mean they have to work more hours to earn the same income (after tax) so labour supply could actually increase

Question 8

non pecuniary benefits

Answer 8

non monetary benefits (eg changing the world, company car or company holiday car
non pecuniary benefits will increase labour supply and shift supply to the right and decrease wages

firms have to pay workers higher wages to make up for non pecuniary benefits

Question 9

education and training
supply
and demand evaluation

Answer 9

if more students have education and training there will be more supply of labour

demand also increases for these specific sectors because this will increase productivity meaning each worker will be able to produce more software and make firms more profit

however if workers become productive each worker can produce more firms might reduce demand because they need fewer worker now